Last Updated on May 23, 2022 by Mary Pressler
The State of the National Solar Industry
What’s in the Report From the Solar Energy Industries Association?
With more than 1,000 companies as members, the Solar Energy Industries Association (SEIA) has the goal of reaching 30% solar generation in the US by 2030. A key part of their work is publishing quarterly reports about the state of the national solar industry.
The US Solar Market Insight Report provides many interesting facts and figures, which include:
- Average pricing per market segment: residential, commercial, community and utility.
- Megawatts installed per market segment.
- Solar power growth forecasts.
- Current opportunities and threats in the solar power industry.
To develop their quarterly reports, the SEIA collaborates with Wood Mackenzie, a leading research and consulting firm globally. Based on the latest data, solar power has emerged as the fastest growing electricity source in the US, representing 54% of the total generation capacity added in 2021.
Texas Is the Leader in the US Solar Industry
California can be considered the birthplace of the US solar industry, and the state once had 50% of America’s installed capacity. However, Texas has emerged as the top solar state by installed capacity in 2021, with 4,523 megawatts added during the first three quarters. California is in second place with 1,899 MW, while Florida follows in third place with 1,219 MW. In other words, the solar capacity added in Texas during 2021 has been 45% higher than the combined capacity added in California and Florida (3,118 MW).
Together, the top three solar states have added over 7.6 gigawatts in 2021, while the total capacity added across all states has been 15.7 gigawatts. In other words, almost half of the new solar panels installed by the US are located in Texas, California and Florida. Consider that these numbers only cover the first three quarters of the year (January – September), since the SEIA and Wood Mackenzie need time to gather and analyze the data. When the Q4 results are added, the solar capacity for 2021 will most likely exceed 20 GW.
Utility-scale solar power represents 3.8 GW of the total 5.4 GW added in Q3 2021. Compared with the same quarter last year, this represents an increase of 33%. The growth of utility-scale solar power is largely concentrated in Texas and Virginia, representing more than half of the new capacity additions.
The outlook is very positive for utility-scale solar power. The SEIA report found that 6.1 GW of new contracts were signed in Q3 2021, and there are now 81 GW in the pipeline. The US is currently on track to install 122 GW of utility-scale solar power between 2022 and 2026.
The US Installed 1 GW of Residential Solar in a Single Quarter
Q3 2021 was excellent for the residential solar market, and this is reflected by the data provided in the latest SEIA report:
- With 1,073 MW installed, the home solar market surpassed one gigawatt in one quarter for the first time ever.
- The number of individual home solar systems installed in Q3 2021 surpassed 130,000.
In the case of Texas, 90 MW of home solar power were installed during Q3 2021. California was the only state with a higher installed capacity in this market segment, with 373 MW.
The utility solar market is currently the largest with 3.8 GW in Q3, followed by the residential market with slightly over 1 GW. The commercial and community solar markets are still relatively small, with 327 MW and 180 MW respectively.
The SEIA Updates Average Price Data for US Solar Power
The US Market Insight Report includes a section that covers the average price of solar power systems in each market segment. This price information is gathered directly from solar projects of all sizes, which makes it very accurate. The latest report shows price increases in all segments, and this can be attributed in great part to inflation and supply chain issues:
- Residential: $3.06 per watt
- Commercial: $1.45 per watt
- Fixed-tilt utility solar: $0.89 per watt
- Tracking utility solar: $1.01 per watt
The following table summarizes the price changes with respect to the last quarter (Q2 2021) and one year ago (Q3 2020):
|Market Segment||Quarterly Price Change||Yearly Price Change|
|Utility, fixed tilt||+3.49%||+8.54%|
Solar systems of all sizes have increased in price, as you can see above. According to the SEIA, this has been caused mostly by material price inflation and high shipping costs. However, solar power remains a great investment even with the recent price increases.
The latest electricity price data from the US EIA shows a yearly increase in most states, and an overall increase of over 5% nationwide. This increases the savings achieved by solar panels, which compensates for their slightly higher prices.
Main Opportunities and Challenges for the US Solar Industry
Delayed shipments and other supply chain disruptions are currently the main hurdle for the US solar industry, and large projects that depend on imports are affected the most. Considering these issues, the SEIA and Wood Mackenzie have reduced their 2022 growth forecast by 25%, which represents 7.4 GW of solar power that will be delayed. However, this varies by market segment, and the forecast for residential solar power has actually increased by 4%.
Combined with supply chain issues, the US solar industry has also faced uncertainty around the policies for imported solar components.
- Anti-dumping and countervailing duties (AD/CVD) were being proposed for solar cells for Malaysia, Thailand and Vietnam. This measure was delaying shipments, and module prices were expected to rise sharply. Fortunately, the petition was dismissed.
- There is also a Withhold Release Order (WRO) for products from the Xinjiang region in China, and this includes solar components. However, manufacturers can reduce the risk of detention by showing proof that their shipments are not from Xinjiang.
In spite of the supply chain issues and policy uncertainty, there is also great news for the US solar industry. The Build Back Better Act includes an increase and extension of the Renewable Energy Investment Tax Credit (ITC), which has been a key incentive for solar power in the US.
- If the Act is approved with no changes with respect to solar power, the federal tax credit will increase from 26% to 30% (the rate that was available before 2020).
- The ITC will also be extended until the end of 2026, giving homes and businesses more time to install solar panels at reduced cost. Under the current schedule, the incentive expires after 2023.
According to the SEIA, a federal tax credit under this condition would increase solar installations by 31% beyond their “business-as-usual” scenario. The US could surpass 300 GW of solar generation by the end of 2026, which means the capacity triples with respect to 2021. With the proposed tax credit extension, Texas alone would add 44 GW of solar power by 2026.